La Nacion

Wednesday, September 12, 2012
By Martin Kanenguiser

The Paris Club will analyze the status of Argentina’s debt today, which has been unpaid since the end of 2001 and which comes to around US$9 billion.

Diplomatic sources told LA NACION yesterday that the creditor countries are waiting “anxiously and with concern” over the possibility that the government will present a payment plan, after having sent a letter last April in which they called for some kind of formal response from Argentina after more than ten years of default.

The last time that the governments discussed this issue was in June, before the summer in the northern hemisphere, but “there was no proposal from Argentina since then,” said the source, with a tone of resignation.

Informally, the last contact was when the government sounded out with some embassies if there was a chance of financing YPF after the exit of Repsol in exchange for normalizing this balance, but they got total refusals.

The context for the meeting today is not the best: in addition to the extensive annoyance that grips the creditors, yesterday came added criticism in a meeting that the Club held with the Institute of International Finance (IIF), the think tank for the banks from around the world.   The IIF holds a very critical position against Argentina and has so since 2002, especially since the negotiation of the first swap to exit the default (2005), because they wanted a more friendly offer to the bondholders then what Kirchnerism launched.

In the meeting, in which bankers, analysts and officials of other governments attended, “the attendees exchanges opinions about the restructuring of Argentina’s debt,” said the IIF in a statement.  “The direction of the discussion was that, after focusing on its restructuring, Argentina could resume access to the capital markets,” the Club said in a statement.  Curiously, it took up Argentina as one of three case studies, with the Ivory Coast and St. Kitts and Nevis (a small island nation in the Antilles).

Speaking about Argentina were the representatives of the French Treasury (which acts as Club secretary), of the bondholders in Italy, Nicola Stock, and from the U.S., Hans Humes and two American academics, Anna Gelpern and Mitty Gulati. Also present were Club president Ramón Fernández and IIF executive director Charles Dallara. "The debate was not amiable,” the source said, adding that the comments were used as a basis for the discussion among the governments scheduled for today in the French capital.

At the end of 2008, President Cristina Kirchner announced the payment of the debt with the Paris Club with Central Bank reserves through a decree, but it was never applied.

The IMF’s bad mood

An executive with good connections with the government believes that the resolution of this issue “is quite far off” from the agenda of the economic team.  “They’re concerned with getting dollars, not spending them,” he said.

However, it isn’t ruled out that some signal could be sent to address the annoyance that also prevails within the board of the International Monetary Fund (IMF), before next Monday when it will debate the status of Argentina’s public statistics.  After granting six months last February to improve the transparency of the statistics on inflation and GDP, the board could opt on Monday for a simple statements to take into account that the government has not moved ahead on dispelling doubts that have existed since 2007 on the figures of the INDEC, or begin a process of sanctions.

Article 8 establishes that a motion of “censure” could be applied by other countries and then a process could be activated in which the country would subsequently lose the right to resources from the IMF (in 2010 it received US$2.5 billion from the organization, which helped cover over the fiscal deficit)  and then its right to vote.

Without significant progress in the credibility of its statistics, the government opted for doubling up on the tug of war and designated Sergio Chodos, who until now has been a director at the BCRA, as its representative to the IMF.

Chodos, who will go from collecting a salary of 90,000 pesos to only 20,000, will replace Alfredo Mac Laughlin, an ex-banker that, after the death of Nestor Kirchner, lost contact with Buenos Aires.  In the government, they are anticipating a “more strong and coherent strategy” equal to that of the World Bank, in which Guido Forcieri, another official linked to Vice President Amado Boudou, will replace Alberto Camarassa, in carrying out the difficult task of getting a plan of credits for US$3 billion passed in November with the opposition of the United States.

“Officials getting too comfortable in Washington will have to be avoided,” said an official source.